The first-time homebuyer has become an increasingly important customer for homebuilders, who are catering to the market segment by producing smaller homes with relatively modest prices, according to government data on home buyer demographics and analysis of the information by the National Association of Home Builders. 

The data comes from the latest edition of the American Housing Survey, a biennial survey most recently conducted in 2009 by the Census Bureau for the Department of Housing and Urban Development. The AHS shows, for example, that the average age of a new-home buyer during the period from 2007 to 2009 was 38, with an average household income of $101,811, and a home with a market value of $315,395. 

First-time buyers of new homes, meanwhile, have an average age of 31 and household income of $67,342. The market value of these new homes averages $184,091, the AHS data show. A key feature of this group: even though the percentage of new-home buyers, relative to existing-home buyers, has dropped – to 17% in the 2007-2009 period from 21% in the 2005-2007 period – the share of first-timers overall during the 2007-2009 period grew to 41% from 35% for 2005-2007. 

Marketing to baby-boom offspring

What’s more, NAHB points out, the upward trend is expected to continue as baby-boomer children – a generation that is larger than that of their parents’ – move into their household-formation years. 

While new housing is, on average, more expensive than the existing housing stock – about $315,000, versus about $238,000 for existing homes – 13 percent of first-time buyers between 2007 and 2009 purchased new homes. That percentage is expected to grow as builders hew toward smaller, less-expensive homes.

Homebuilders do seem to be responding appropriately, NAHB’s chairman, Bob Jones, noted in a recent NAHB news release. “Builders are increasingly gearing their homes to the needs of first-time buyers,” he said, “and we expect the trend to continue in the period ahead as the economy begins generating more jobs and more people in their 20s form households.” 

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